Fiscal 2008 Financial Review

Transcription

1 Business Overview Introduction CEO Statement Fiscal 2008 Financial Review s Approach to CSR Protecting the Environment Improving Safety Enhancing Value for Stakeholders Corporate Governance For fiscal 2008, s financial results on a consolidated basis were as follows: net revenues were trillion, operating losses were billion, ordinary losses were billion and net losses were billion. s global sales for fiscal 2008 were 3,411,000 units, down 9.5% from the previous year. Sales in North America were down 16.2% to 1,133,000 units, while sales in the United States fell by 19.1% to 856,000 units. In Japan sales were down 15.1% to 612,000 units, and sales in Europe fell by 16.7% to 530,000 units. In the General Overseas Markets, sales climbed by 7.1% from fiscal 2007 to reach 1,136,000 units. was quick to take actions to adapt to the financial crisis and economic recession. We are fully mobilized and working toward the recovery of our performance. Our Views 122 Fiscal 2008 Financial Performance (billion yen) Business Overview 126 FY2007 Change Third-Party Evaluation 130 Consolidated net revenue 10, , ,387.2 Consolidated operating profit Non-operating loss Ordinary profit Net extraordinary loss Net income CAPEX R&D Depreciation FOREX for 100.7/$ 144.1/

2 Business Overview Performance Data No. of employees (consolidated) No. of individual investors Corporate tax R&D expenditures (% of sales) Capital investment (% of sales) Donations for disaster relief Motor No. of employees Co., Ltd. data Average age (years) Average service (years) Average annual salary* Disabled employment ratio No. of employees taking parental leave No. of employees taking nursing care leave No. of unionized employees FY , , billion billion (4.4%) billion (4.9%) 10.0 million (by Motor Co., Ltd.) 3.18 million (for Java earthquake by employees in Japan and Indonesia) 32, ,226,628 approx. 2.0% ,521 *Average annual salary for employees not in managerial positions; includes bonuses and overtime pay. No. of Employees (as of end of March 2009) Japan North America Europe GOM Total (consolidated) 85,697 25,186 14,782 50, ,766 Union Information FY , , billion billion (4.2%) billion (4.0%) 6.5 million (by Motor Co., Ltd.) 5.57 million (for Noto Peninsula and Niigata Chuetsu-oki Earthquakes by employees, union members in Japan) 31, ,138,692 approx. 2.1% , , , billion billion (5.4%) billion (4.5%) 30.0 million (by Motor Co., Ltd. for China s Sichuan Earthquake, etc.) AU$50,000; 100 vehicles (by Motor Co. [Australia] Pty. Ltd. for Australian wildfires; vehicles leased at no cost) 10 Qashqais (by Dongfeng Motor Co., Ltd. for China s Sichuan Earthquake; vehicles donated) 30, ,280,776 approx. 2.1% ,822 Motor Co., Ltd. s employees are affiliated with the All Motor Workers Union, for which the governing body is the All and General Workers Unions, and the Japanese Trade Union Confederation (Rengo) through the Confederation of Japan Automobile Workers Unions. The labor-management relations of the company are stable, and the number of union workers was 27,822 as of March 31, In addition, the Motor branch of the All Japan Metal and Information Machinery Workers Union (JMIU), another trade union, had one affiliated employee as of the same date. At most domestic group companies, employees are affiliated with their respective trade unions on a company basis, and the governing body is the All and General Workers Unions. At foreign group companies, employees are affiliated with their respective trade unions. In Mexico, for example, workers are affiliated with a domestic trade union for which the governing body is the Confederation of Mexican Workers (CTM) or independent trade unions, whereas most employees in the United Kingdom are affiliated with the Amalgamated Engineering and Electrical Union (AEEU). Local employees of other group companies are affiliated with different types of trade unions according to the labor environment in each country. Sales by Model (Top 5) Japan Model Serena Moco Tiida (includes Latio) Note Cube U.S. Global Network (Numbers/locations as of June 2009) R&D: 12 countries/areas (Japan, USA, U.K., Taiwan, China, Thailand, India, South Africa, Mexico, Brazil, Spain, Belgium) Design: 3 countries (Japan, USA, U.K.; total of 5 design centers) Automobile Production Plants: 18 countries/areas (Japan, USA, U.K., Spain, Taiwan, China, Thailand, Philippines, Malaysia, Indonesia, Mexico, Brazil, Iran, South Africa, Kenya, Egypt, Pakistan, Russia) Model Altima Sentra Tiida Rogue Murano Europe Model Qashqai Micra (includes C+C) Note X-TRAIL Tiida (units) (Apr. 2008Mar. 2009) 65,264 60,613 57,564 56,219 47,610 (units) (Apr. 2008Mar. 2009) 242,919 92,464 82,453 73,821 61,073 (units) (Apr. 2008Mar. 2009) 177,962 73,284 67,510 48,060 34,654 Serena Altima Qashqai

3 Business Overview Business and Other Risks Information on risks involved in business operations has been disclosed in the Yukashoken-Hokokusho for the year ended March 31, 2008, as follows: Economic Factors The demand for products manufactured by the Group is affected by the economic conditions in each country or market in which they are offered for sale. The Group conducts operations all over the world, particularly in the major markets of North America, Europe, the general overseas regions and Japan. While the Group strives to develop a comprehensive and integrated projection of the global economic outlook, any greater-than-anticipated downturn in one of these markets may have a significant effect on the Group s financial position and results of operations. Risks Involved in International Activities and Overseas Expansion The Group s manufacturing and marketing activities outside Japan are conducted in the United States, Europe and the general overseas regions. The Group forecasts and evaluates a wide variety of risks inherent in conducting business in overseas markets, including the factors noted below. Each of these factors could entail a greater-than-anticipated level of risk, which could have significant effects on the Group s financial position and results of operations: Unfavorable political or economic factors Legal or regulatory changes Potentially adverse tax consequences Labor disputes including strikes Difficulties in recruiting and retaining personnel Social turmoil due to terrorism, war or other destabilizing factors. Research and Development The Group s technology must be useful, pragmatic and easy to use. The Group anticipates the nature and scope of the market demand, and then prioritizes and invests in new technologies. However, any sudden and greater-than-anticipated changes in its business environment or in customer preferences may impact negatively on customer satisfaction with these new technologies. Product Defects The Group places a high priority on safety and endeavors to enhance safety from the standpoint of research and development, manufacturing and sales. Although the Group has insurance policies to cover product liability, this does not necessarily mean that all potential defects and the related liabilities are fully covered. If the Group were to implement significant recalls in volume and amount for the benefit of customers safety, the Group would incur significant additional expenses that could adversely affect its financial position and results of operations. Fluctuation in Foreign Currency Exchange Rates The Group s Japanese operations export vehicles to various countries around the world. In general, the appreciation of the yen against other currencies adversely affects the Group s financial results of operations. In contrast, the depreciation of the yen against other currencies favorably affects the Group s financial results of operations. Any sharp appreciation of the currencies of countries where the Group manufactures vehicles against the yen could lead to increases in both procurement and production costs, which would adversely affect the Group s competitiveness. Derivatives The Group utilizes derivative transactions for the purpose of hedging its exposure to such risks as fluctuations in the foreign exchange rates of its receivables and payables denominated in foreign currencies, the interest rates of interest-bearing debt and fluctuations in commodity prices. While the Group can hedge against these risks by using derivatives transactions, the Group may miss potential gains that could result from seizing the market opportunities to profit from such fluctuation in exchange rates and interest rates. In addition, the Group manages its exposure to credit risk by limiting its counterparties to financial institutions with high credit ratings. However, a default by any one of these counterparties could have an adverse effect on the Group s financial position and operating results. Lawsuits and Claims With respect to various lawsuits and claims that the Company and the Group encounter, the possibility exists that the position defended by the Company will not be accepted and that the outcome may be significantly different from that anticipated. As a result, any such verdict or settlement could adversely affect the Group s financial position and operating results. Government Regulations The automobile industry worldwide is influenced by a broad spectrum of regulations governing the emission levels of exhaust fumes, fuel economy guidelines, noise level limitations and safety standards. The Group expects these regulations to become increasingly stringent. In order to ensure compliance, it may be necessary for the Group to make significant ongoing investments in these areas, which would have an impact on its financial position and results of operations. Intellectual Property Rights The Group owns a wide variety of proprietary technologies and has the expertise to differentiate the Group s products, making them unique from those of its competitors. These assets have proven their value in the growth of the Group s business and will continue to be of value in the future. The Group strives to protect its intellectual property assets. However, in certain markets, the Group may encounter difficulty in fully protecting the proprietary rights to its own technologies. The Company established the Intellectual Property Rights Management Department in April 2004 to protect intellectual property rights in specific areas, strengthen activities to protect s intellectual property rights, abstract new intellectual property rights and perform various activities to protect and create the and Infiniti Brands. However, cases may arise where the Group finds itself unable to prohibit others from infringing on its intellectual property rights. Natural Disasters The Group s corporate headquarters and many of its manufacturing facilities are located in Japan, where the statistically proven probability of earthquakes is higher than in many other countries. The Group has developed risk management guidelines relating to earthquake damage and the COO has organized a global task force to direct disaster prevention and recovery activities. In addition, the Group has been strengthening its manufacturing facilities with anti-seismic reinforcement. However, if a severe earthquake were to hit one of the Group s key facilities causing a halt in production, this would adversely affect the Group s financial position and results of operations. Sales Financing Business Risk Sales financing is an integral part of the Group s core business, providing strong support to its automotive sales, while maintaining high profitability and a sound and stable financial condition through strict risk management policies. The Global Sales Financing Business Unit was established at the Company to further enhance risk management. However, the sales financing companies have a high exposure to interest-rate risk, residual value risk and credit risk, which may adversely affect the Group s financial position and results of operations. Counterparty Credit Risk The Group does business with a variety of counterparties and manages its counterparty credit risk by conducting a comprehensive annual assessment of its customers financial condition based on their financial information. Nonetheless, any significant default by counterparty would adversely affect the Group s financial position and results of operations. Employee Retirement Benefit Expenses and Obligations The amounts of retirement benefit obligation and related expenses of the Group are calculated using various actuarial assumptions including the discount rate applied, the projected rate of return on plan assets and other factors. If the Group s actual results differ from those assumptions or if the assumptions change, the resulting effects will be accumulated and recognized systematically over future periods. The cumulative effect could adversely impact the recognition of expenses and liabilities recorded in future periods. Purchase of Raw Materials and Parts The Group purchases raw materials and parts from many suppliers. Market conditions beyond the Group s control and the risk that suppliers are unable to procure raw materials and parts continuously may adversely affect the Group s financial position and results of operations.

4 Blue Citizenship Introduction CEO Statement Blue Citizenship s Approach to CSR Protecting the Environment Improving Safety Enhancing Value for Stakeholders Corporate Governance is deploying various activities under the banner of Blue Citizenship, which encapsulates our desire to preserve the blue Earth and to be a corporate citizen in harmonious coexistence with people and society. Those activities range from such global issues as the environment to contributing to communities, promoting diversity and making personal mobility available to as many people as possible. We look forward to working together with people all over the world as we develop and expand our Blue Citizenship activities over the long term. Our Views 122 Business Overview 126 Third-Party Evaluation 130 Contributing to people and communities Pursuing a safer mobility society Creating high-quality products and services Making cars more accessible Achieving eco-friendly vehicles and infrastructure

5 Third-Party Evaluation I believe that global automakers have three major responsibilities. The first is to develop safe cars, the second is to address global warming and the third is to create a new mobility society for the future. Reading s 2009 with the above in mind, I find it to be a splendid document presenting a detailed picture of s activities. Let me narrow my focus to each of those responsibilities. First is the area of safe cars. Vehicles are indispensible parts of our lives today, but at times they can pose a danger to us. s approach, which seeks to reduce this danger by designing cars that help people to avoid accidents and that protect people when accidents do occur, is a promising one to take. Also inspiring are the company s target of halving the deaths and serious injuries in accidents involving its cars by 2015 and its ultimate goal of reducing them to practically zero. These goals resonate with me. The second area is s measures to deal with environmental issues. As the impact of global warming becomes increasingly severe, it is only natural for as a member of the industry whose products output carbon dioxide, a greenhouse gas, in their exhaustto take steps to reduce CO2 emissions. There is growing global recognition of the need to slash emissions by 70% by The company s dedication to doing its part is evident, for instance, in its adoption of the QCT-C framework, which adds a CO2 component to the traditional quality, cost and time management indices. Third is the future state of our mobility society. In this connection humanity has long hoped for a society where the means of mobility emit no CO2. recognizes its great responsibility in this area as a global automaker, and has moved quickly to raise the banner of achieving a symbiosis of people, vehicles and nature in tackling a broad range of projects. We heartily welcome s drive toward the ultimate goal of popularizing zeroemission vehicles all around the world and its creation of an environmentally friendly mobility society making full use of Intelligent Transport Systems. Of course, a company s corporate social responsibility is not limited to these three areas. The challenge for, which does business all around the globe, is how to show responsibility in tackling problems of a global nature. Equally important are the issues of deepening its relationships with diverse stakeholders and carrying out corporate governance in a manner befitting a trustworthy company. The 2009 provides a wealth of information on all these topics as well. This report is a valuable publication for the above reasons, but it remains somewhat inaccessible to the average reader. The terminology can be difficult in places, and there is a tremendous volume and variety of information contained in these pages. Is it in fact necessary to include all of this? presents complex explanations of its CSR approach in terms of vision, mission, policy and the Way. To make this a publication presenting s true nature to a broader readership, the company should consider framing the details of the report for the average member of society, and not just for specialists. Today the automobile industry faces an extraordinarily challenging business environment, and the process of global warming continues unabated. Although surrounded by these conditions, is making a number of commitments to society, as detailed in this report. The world is watching to see how the company makes progress on these commitments, and over time it will judge the company based on its results. has a dream that one day soon, its zero-emission vehicles will make their grand appearance, thereby enriching people s lives. Along with many others, I sincerely look forward to the day when this dream comes true. Takejiro Sueyoshi Special Advisor to UNEP Finance Initiative in the Asia Pacific region

6 and Socially Responsible Investment In recent years investors have paid more attention to the concept of socially responsible investment (SRI), evaluating corporations from environmental and social perspectives in addition to financial fundamentals. is proud to be listed as part of the FTSE4Good Index Series and the Morningstar SRI index (as of June 2009). FTSE4Good Index Series This SRI index is managed by the FTSE Group, an independent company jointly funded by the Financial Times and the London Stock Exchange. Morningstar SRI The MS-SRI (Morningstar Socially Responsible Investment Index) is managed by financial information services firm Morningstar Japan K.K. Scope of the Report The focus of this report is on introducing s global policies and our approach to and activities toward sustainable development. Where we are describing regional efforts, we refer to the specific region name in the text; when no specific region is identified, the descriptions of s activities and practices pertain to Motor Co., Ltd. in Japan. Period Covered The report covers fiscal 2008 (April 2008 March 2009); content that describes efforts before or after this time period is indicated in the respective section. Third-Party Certificates No globally accepted method for third-party certification of sustainability reports has yet been established. Considering this situation, in which a review would not necessarily lead to the intended assurance of credibility, we have decided not to seek third-party certification. Referenced Reporting Guidelines This report uses the Global Reporting Initiative (GRI) ing Guidelines (2002 version and G3) and the Environmental Reporting Guidelines (2003 version) of Japan s Ministry of the Environment as references. We also report on a number of other actions that are not covered by the guidelines. Forward-Looking Statements This contains forward-looking statements on s future plans and targets and related operating investment, product planning and production targets. Please note that there can be no assurance that these targets and plans will actually be achieved. Achieving them will depend on many factors, including not only s activities and development, but also the dynamics of the automobile industry worldwide, the global economy and changes in the global environment. Mistakes and Typographical Errors All errors discovered after the report is published will be corrected and displayed at the URL below. For further information, please contact: Motor Co., Ltd. Global Communications and CSR Division Global Brand Communications and CSR Department CSR Group 17-1, Ginza 6-chome, Chuo-ku, Tokyo , Japan phone: +81(0) fax: +81(0) Motor Co., Ltd. is moving to a new location on August 18, 2009: 1-1, Takashima 1-chome, Nishi-ku, Yokohama-shi, Kanagawa , Japan NISSAN_SR@mail.nissan.co.jp phone: +81(0) fax: +81(0) Publication date June 23, 2009